When Heather McKay started her photography business fifteen years ago, the plan was simple: Photograph as long as her career is viable, and follow in the path of seasoned photographers before her, selling her business to an up-and-coming photographer when she was ready to teach, consult or retire.
Now, “There’s no chance of that,” the 43-year-old Rochester, New York based photographer says. Thanks to “everyone wanting a side hustle” as well as the popularity of Instagram, iPhone photography and the concept of personal branding, McKay’s business is no longer an asset she can sell, just one of the ugly side effects of the growing gig economy.
Over 57 million Americans, or about a third of the U.S. workforce, freelance. That number could grow to about 43%, according to research from Intuit and Emergent Research. Freelancing is especially popular among young people, with nearly half of all millennials currently doing it.
While the perks of being your own boss are plentiful—a flexible schedule, lack of office politics, and the freedom to work from anywhere are just a few—there are also plenty of negative consequences to an economy increasingly based on short-term contract gigs, especially when so much of our economic system—from renting and apartment to getting low-cost health care—assumes that you’ve got a steady job with a predictable income.
“The organization of our society is based around W2s, not 1099s,” says Robert McGuire, publisher of Nation1099, a website aimed at educating freelancers, entrepreneurs and gig workers. “Everything—healthcare, retirement savings, etcetera—is built around that model. Selling skills [or products] for money is a different way of working: It’s very possible to succeed but we have our keep our eyes open about potential pitfalls and downsides.”
And as gigs become more accessible and easy to pick up—anyone with a car and good record can drive for Uber or Lyft—the supply increases and prices get driven down. When everyone is a driver, writer, photographer and on-call masseuse, it can be hard to weed out the pros from the hobbyists, and the value of that work is diminished.
The pay ain't great when you subtract the benefits regular employees enjoy
Freelancers contributed $1.4 trillion to the U.S. economy in 2017, but their pay is all over the place, with part-time Uber drivers earning as little as a few hundred dollars a month and contract tech workers making nearly $150,000 a year. The average American freelancer makes $31 an hour, according to a pay survey by payment company Payoneer. But when you are a freelancer, you can't bill for time off to see a doctor, take care of a sick kid or take vacation.
On a slow month a freelancer may pick up a job delivering with Postmates, while an Uber driver may spend time sitting in their car writing poetry to eventually sell one day. About 85 percent of side-gig workers earn an average of $500 a month, according to a 2017 analysis of loan application data by Earnest study, meaning that people who sell services via Airbnb, Etsy, DoorDash and more popular side-gig apps are likely using these modern conveniences as additional income streams, rather than trying to cobble together a career of side hustles.
Freelancers also have extra expenses that employees don't, including office supplies and space (the hip coworking space WeWork starts at $220 a month), subscriptions (including publications, apps, and tools like Microsoft Office for $99 a year), plus whatever else you need to do your job (like physical tools, a vehicle, cleaning supplies, digital equipment, etc.).
Forget about other standard workplace benefits like paid time off for vacation, illness or parental or family leave. A week out with the flu or a family emergency is at least a week without pay—and sometimes more, depending on the consequences of postponing work or stepping away from adding new gigs while out of commission. Freelancers are also on their own for health insurance, retirement savings, and paying their commuting costs.
Worker rights go out the window
While not having a boss may sound great, it comes at a price: There’s a lack of workplace protection for gig workers, especially when it comes to sexual harassment. As Nathan Heller wrote in The New Yorker in January, “Freelance workers are highly vulnerable [to harassment]. They have little institutional support and few, if any, supervisors.”
Gig economy workers may also be more susceptible to gender discrimination, The Conversation reported. That's because workplace norms are more clearly delineated in a traditional employer-employee relationship. "As traditional worker-employer relations are replaced by peer-to-peer transactions on a global scale, the application of anti-discrimination labor law becomes challenging."
There are “different power structures and dynamics between freelancers and clients” versus people with more formal setups, explained Jaime-Alexis Fowler, founder of the worker advocacy group Empower Work. “Where someone [who is an employee] may raise a complaint with HR, [freelancers] don’t have the opportunity,” Fowler says.
It's making things harder for the rest of us
You may think your side gig is good for you and the economy—since presumably the more you earn the more you can spend—but it has some unexpected consequences for your neighbors. Those range from ride share services clogging city streets to less affordable housing caused by short-term rentals.
The lucrative side gig of Airbnb rentals has been attributed to everything from higher rents to a lack of housing units in New Orleans and New York City. Meanwhile, Vancouver recently imposed strict regulations on Airbnb users, only allowing hosts to rent out their primary residence on the site, preventing wealthier people from quite literally holding a monopoly over short or long term housing in the city by purchasing investment properties and listing these bonus rooms on the site.
“Airbnb affects rental rates by reducing housing supply in the long-term market,” explains Davide Proserpio, Assistant Professor of Marketing University of Southern California, who has studied its effects. As some landlords switch from long-term to short-term rentals, there’s a reduction of supply in the long-term market, and that, in turn raises prices.
Airbnb spokesperson Christopher Nulty defended the service by saying that it lowers housing costs for the hosts by enabling them to rent out part of their home. "We see home sharing as a really important economic opportunity for every person in every neighborhood,” he says.
What's more, Airbnb can increase home values in the neighborhood, Proserpio explains, as “the increase in rental rates is capitalized into the house prices.” But if you're a gig worker just struggling to get by, that's probably not much of a consolation.